Fairer taxes must be part of solution

Date Published: 02/07/2009

Author: Dane Smith, President and Nan Madden, Director of Minnesota Budget Project, Minnesota Council of Nonprofits

Fairer taxes must be part of solution

Winona Daily News

Versions of this op-ed also appeared in The Star Tribune, The Bemidji Pioneer, The Recorder-Spokesman, and The Mankato Free Press.
As Minnesotans brace for all the human pain and suffering caused by one of the more serious private-sector failures in memory, it makes no sense whatsoever to knock the stuffing out of our public sector as well.

It’s our public institutions and investments — schools and colleges, transportation systems, public health protections, and human service and social supports for families — that provide not only emergency assistance and a safety net, but also the long-term investments we need to achieve a more evenly shared prosperity.
Gov. Pawlenty’s proposed budget compounds private-sector job loss with public-sector cuts. And once again, as in 2003, it imposes disproportionate budget-balancing pain on those least able to afford more hardship. The proposal is not without redeeming value.

To be sure, some cuts need to be made to balance a $5 billion projected shortfall over the next two years.

But in many respects this budget is both cruel and unusual punishment. It’s cruel in that it disproportionately demands sacrifice from those in the middle and lower incomes, those least able to cope with the steepest recession in decades. And it’s unusual in that many governors in other states are at least leaving the possibility of revenue and tax increases on the table.

Three particularly damaging elements in the proposal stand out. The proposal would deprive an estimated 113,000 hard-working Minnesotans the modest subsidies they depend on for health care, which is otherwise unaffordable or not provided by their private-sector employers, many of whom are now further reducing health benefits.

The proposal also reduces state spending on higher education by 10 percent, making it harder for Minnesotans to access the education and training they need to succeed in this economy, and putting direct pressure on tuition. The proposal once again cuts local governments, which are strained to the limits already to provide basic services — from police and fire protection to parks and environmental safeguards — and a quality of life in our neighborhoods that Minnesotans prize.
The Invest in Minnesota Campaign, comprised of members and leaders of our state’s religious, labor and nonprofit communities, believes that we also will need to raise revenue fairly to avoid these damaging cuts to the public investments.

A range of feasible revenue-raising options exist, and policymakers should ensure that, as a whole, their revenue package makes the tax system more fair.
The best way to raise tax revenues fairly is through the income tax. For example, one possibility would be a return to the more reasonable income tax rates on top incomes that existed before the huge permanent tax cuts passed in 1999 and 2000.

Currently, those making $355,000 a year or more pay about 9.5 percent of their income in taxes while other Minnesotans are paying 11.7 percent. Minnesota currently foregoes about a billion dollars a year, just in income taxes, as a result of the cuts in 1999 and 2000.

Taxes are the dues that people pay in a democracy to build a civilized society. Taxes support services, structures, and programs that protect and benefit Minnesotans. The anti-tax orthodoxy that has prevailed at the federal and state level for more than a decade has not delivered the goods that were promised, and it’s time to get reasonable about modest increases on those who can most afford it.

Dane Smith is president of Growth & Justice. Nan Madden is the director of the Minnesota Budget Project, Minnesota Council of Nonprofits.